Still the dream: Take-away from subprime economic disaster should not be that home ownership is not for everyone

Take-away from subprime economic disaster should not be that home ownership is not for everyone.

Copyright 2008 Houston Chronicle

Published
5:30 am CDT, Friday, April 4, 2008

DAVID Frum, an author, former speechwriter for President Bush and an American Enterprise Institute resident scholar, made the case last month on American Public Media radio that the recent meltdown in the subprime mortgage market is evidence that owning a home might not be the best thing for lower-income Americans.

Owning a home makes it hard for poorer people to move to find better jobs, Frum mused. He said maintenance expenses are too unpredictable for the badly off. They can lose their shirts, he worried, if they can't make their mortgage payments, while a renter is merely evicted.

Then Frum pondered further: "Maybe we should also question the great American home ownership ideal for middle-class people as well."

What? These are sentiments that for decades have been so opposed to the prevailing wisdom that they rarely were uttered as part of reasonable public discourse. Public policy that encouraged home buying tended to follow that accepted line of thinking.

But with foreclosures mounting across the country — according to Texas Sen. Eliot Shapleigh, January saw 14,698 foreclosure filings in Texas, making this state third in the nation for failed mortgages that month — there seems to a sea change in thinking on the American Dream. Now everyone from real estate market analysts and think tank fellows to high-ranking government officials say they have doubts about whether promoting home ownership is a good idea for many Americans.

What a shame.

After all, the fundamental principles behind the concept have not changed — that home ownership is good for families, strengthens local tax bases, improves neighborhoods and turns renters into community stakeholders.

What Americans need now is not lectures about how they lack the wherewithal to own a home, but sound banking and lending practices that give credit-worthy consumers access to mortgages under terms allowing repayment over time at reasonable rates. The result of the current subprime mess should be an overhaul of irresponsible lending — not putting the American Dream beyond the reach of responsible, hard-working families.